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UBS Q1 Profits Drop 64%; Mixed Results for Wealth Unit

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UBS Group’s (UBS) first-quarter profits fell 64% to 707 million Swiss francs, or about $741 million, missing analysts’ estimates on weak results in investment banking and trading. Meanwhile, revenue dropped 23% to 6.8 billion francs in the first quarter.

“This cocktail of macro issues, geopolitical issues is now coming on,” CEO Sergio Ermotti said in an interview on Bloomberg TV early Tuesday.

“You see a lot of factors that may affect market sentiment — and in that sense you might see volatility — but it’s not the kind of volatility that is translating to client activity. It’s a paralyzing volatility,” Ermotti explained.

UBS’ investment bank reported a 67% decrease in profits to 253 million Swiss francs, the weakest showing in a first quarter since 2009.

The global wealth management unit’s pretax profit fell 41% from last year to 557 million Swiss francs on low transaction volumes, as revenue weakened 16% to 1.885 billion Swiss francs. It had 15.5 billion Swiss francs in net new money.

Shares traded down about 7% at just under $16 per share on Tuesday. 

Wealth Management Americas

The New York-based unit reported revenue that outpaced the results outside of the United States, Canada and Latin America at 1.889 billion Swiss francs, up 5% from a year ago. Pretax profits for the Americas unit, however, were 211 million Swiss francs (about $212 million), representing a year-over-year decline of 17%.

UBS Wealth Management Americas had “a solid start to 2016, despite a volatile market environment, with strong net new money and the most productive advisors in the industry,” the company said in a statement. “Our financial advisors continue to be the industry leader in revenue per FA and invested assets per FA.”

Invested assets were flat from a year ago but rose 2% from Dec. 31 to $1.05 trillion, while net new assets were $13.6 billion in the first quarter.

Assets per advisor stand at $147 million, down 2% from a year ago and up 1% from the prior period. The level of average yearly fees and commissions per rep is now $1,064,000, also down 2% from Q1’15 but slightly higher than $1,061,000 in Q4’15.

This beats the average 12-month production levels reported for the first quarter at Merrill Lynch (BAC) of $983,000 and Morgan Stanley (MS) of $923,000. 

Advisor headcount in the Americas totals 7,145, a gain of five from 7,140 in Q4’15. “We are continuing our strategy to be disciplined in our recruiting, selectively hiring advisors in the top two quintiles and help advisors in the lowest two quintiles transition out of the firm,” the firm explained.

— Check out UBS Boosts Bonuses for Top Teams in 2016 on ThinkAdvisor.